Friday, 14 August 2015

Saving to Stop Storing Problems - by Ben Gummer

I want you to think about this article that you are reading at the moment. It will take you about two minutes, I imagine. It’s been two minutes well spent: not because of the pearls of wisdom you’ll pick up but because by the time you’ve reached the end, the average life expectancy will have risen by about 30 seconds.

Put another way, the time take to read the Star in your 15 minute coffee break will see the age at which the average person is expected to die has increased by nearly four minutes. That’s fifteen minutes every hour, almost two days every week, a week every month and three months every year.

That is the speed at which we are getting older – and it is phenomenal. Never in human history have we seen such an increase in life expectancy. It is so fast that even the predictions made fifteen years ago, at the turn of the century, have proved to be underestimates. In reality that means that whilst the current life expectancy of someone in Ipswich is 79, it is more likely to turn out to be 85.

This is good news: people are living longer and, for most of their life, they are living healthier. It is no coincidence that people look younger, older, than they used to.

All of this raises one big, big challenge, however. If we are living longer, we need to prepare for a longer retirement, and that means saving more than we currently do. The numbers are pretty terrifying. Although we are saving more for our pensions than at any time since records began, only 56% of people are saving adequately – and of women it is only 50%. That’s up from the figure in 2013 (45%) but still means that roughly half the population are not saving enough for their retirement.

The result can already been seen today. Whilst there are many who live comfortably in retirement, there are many who do not. The average salary in Ipswich is £19,924 but the average income that Ipswich people desire in retirement is somewhat higher - £24,102. The reality is that at present, the average income of over-60s in the town is £15,405. There are currently 28,221 people at or approaching retirement age in Ipswich: at this pace, half of those people – a full 14,000 – will not have saved for nor enjoy the retirement they desire.

How can we all put this right?

First, we need to encourage people to save and to save enough. That is why we are enrolling everyone into a basic work pension automatically – five million have done so already, with only 12% opting out. That is a big improvement already.

Secondly, we need to give people greater freedoms over that pension, over their savings and their house. It was bizarre that we did not trust people to look after their own money, forcing retirees to buy annuities. Now people will be able to manage their own assets, which I am sure they will do better than the fund managers that offered such poor value.

Third, the government can support pensioners with a decent state pension for all. Currently it pays £113.10 per week or £5,881 a year; by simplifying pensions we can offer, from April 2016, at least £148.40 or £7,716.80.

By helping people to prepare for old age and then trusting retirees to be responsible, we can ensure that longer lives are also better lives.

If you would like more information, check out the government’s website –www.pensionwise.gov.uk – which gives advice on what you can do to prepare for a happy retirement.

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Ben's office address is:9 Fore StreetIpswichIP4 1JW01473 232 883

Figures this week show that unemployment is falling, a gigantic step towards full employment in the town.

Unemployment in Ipswich is now half 2010 number. Furthermore, youth unemployment is down by 15 people. Unemployment in Ipswich has now fallen for six consecutive months.